To establish a comprehensive program for reducing energy consumption in Department of Defense facilities and to establish incentives within the Department of Defense to save costs through energy conservation.

Directs the Secretary of Defense to conduct a comprehensive survey to determine the potential for reducing energy consumption at Department of Defense facilities through the use of energy-saving measures. Directs the Secretary to implement the survey results by the year 2000. Authorizes appropriations.

Directs the Secretary to establish policies under which a military installation that achieves savings on energy costs may retain two-thirds of the savings realized during each of the first five years. Requires one half of any retained savings to be used for additional energy conservation measures and one-half for morale, welfare, or recreation facilities or for minor military construction projects that will enhance the quality of life for members at the installation involved.

Directs the Secretary, in evaluating sealed bids or competitive proposals for a contract for an energy system for DOD, to take into account the manner in which the bidder or offeror carried out energy conservation measures in the performance of previous contracts.

Directs the Secretary to require each military installation to participate in any programs conducted by publicly-regulated utility companies for the management of electricity demand or for energy conservation.